Tuesday, September 14, 2010

Earlier this month, the FCC issued the latest Public Notice in its nearly year-long march toward regulating the Internet through network neutrality mandates. The Commission's Further Inquiry claims that public discussions have narrowed the scope of disagreement over regulating broadband network management practices. And the request for additional public comment purports to clarify remaining issues under debate. But contents of the Notice itself leave one wondering if the Commission really intends to act within the scope of these supposed new areas of agreement.

In a couple of respects the FCC can be commended for issuing its latest Inquiry. First, by requesting further comments, the FCC's action suggests it is not acting in as much of a rush to impose new Internet regulation as may have been thought. As FSF President Randolph May recently stated upon issuance of the Notice, there is no immediate urgency for the Commission to act on Chairman Genachowski's "Third Way" proposal. Rather, "[s]eeking further comment on the issues relating to specialized services and wireless platforms can only serve to further clarify the issues and, potentially, bridge differences."

Second, the FCC's Public Notice suggests an apparently new recognition by the Commission that case-by-case enforcement of more general, so-called "anti-discrimination" policies offers a more plausible approach to network management regulation than adoption of a set of specific, technical rules to be imposed on broadband Internet access services. In the words of the Notice, "discussion generated by the Commission's Open Internet proceeding appears to have narrowed disagreement" on the idea that "in light of rapid technological and market change, enforcing high-level rules of the road through case-by-case adjudication, informed by engineering expertise, is a better policy approach than promulgating detailed, prescriptive rules that may have consequences that are difficult to foresee."

But there also seems to be less than meets the eye with these Public Notice "positives." In particular, there is a disconnect between the Notice's positive nod to case-by-case adjudication and the "Third Way" proposal's core component: subjecting broadband Internet services to fairly prescriptive common carrier regulation. As FSF Academic Advisory Board member Glen O. Robinson pointed out earlier this week, the FCC "has said it clearly intends to retain as operative all those provisions that are necessary to support control of rates and services (Sections 201, 202, 208) for these are central to its ostensible purpose of preventing 'unreasonable discrimination' in the provision of broadband service." Additionally, "the Commission's NOI suggests that it may not be content with just those provisions necessary to prevent discrimination." (See the FSF Perspectives piece "The Middle Way to Internet Regulation.")

The disconnect is in the details. For aside from the Notice's say-so about case-by-case adjudication as preferable to prescriptive rules, Professor Robinson also pointed out that "nothing in its new public notice suggests any retreat from earlier proposed ('low-level') fixed rules." "What is most noteworthy about some of these rules," Professor Robinson continued, "is that they have nothing whatsoever to do with any applying 'engineering expertise' on an ad hoc or a fixed-rule basis." Professor Robinson's essay specifically referenced the FCC's earlier proposed rules for banning broadband ISPs from charging different prices for enhanced or prioritized (i.e., different) services, except for those fall under the category of "specialized services."

What's more, nothing in the Notice's "general policy approaches" to "specialized services" suggests that any one or more of those approaches marks any kind of retreat from an onerous, rule-based treatment of broadband Internet services that includes and goes beyond network management practices. And the Notice's line of questioning concerning details of the wireless business ecosystem — including third-party wireless device connectivity, usage-based data pricing models, wireless application compatibility and restrictions, and wireless app distribution models — also leaves one wondering if the FCC is really serious about employing case-by-case adjudication after all.

Of course, Congress is truly the authority charged with adopting "high-level rules." And so, Congressional legislation is the legitimate vehicle for granting the FCC authority to establish a proper case-by-case adjudication regime using high-level rules. As FSF pointed out earlier this year in comments submitted in response to the FCC's Notice of Inquiry concerning potential broadband reclassification, "[i]f the Commission determines that, in its view, there needs to be some agency authority over broadband ISPs, it should work with Congress to pass a new, narrowly-circumscribed legislative framework." In particular, FSF said:

The core of a legislative framework should be a provision granting the Commission authority, upon a complaint filed and after an on-the-record adjudication, to act to prohibit broadband ISPs from engaging in practices determined to constitute an abuse of substantial, non-transitory market power and that cause demonstrable harm to consumers. Such a circumscribed market-oriented rule would provide the Commission with a principled basis for adjudicating fact-based complaints alleging that ISPs are acting anticompetitively and, at the same time, causing consumer harm.

It is appropriate to commend the Commission's nod towards reliance on an adjudicatory regime. In the end, however, regardless of whether one thinks the FCC's recent Notice will actually bring real resolution to additional issues still fraught with disagreement, no amount of headway over "specialized services" and treatment of wireless broadband can paper over the serious questions about the Commission's authority to adopt "Third Way" regulations.